National panel questions reliability of Texas’ electric grid

The agency that oversees reliability for the nation’s electric grid has questioned the adequacy of Texas’ deregulated system to meet growing demand for electricity. In a letter to the Electric Reliability Council of Texas, the state’s grid operator, the national group said that the lack of new generation being built in Texas “implies higher reliability risks” and that “ERCOT will need more resources as early as summer 2013 in order to maintain sufficient reserve margin.”

Reserve margin is essentially the cushion of generating capacity that the state has to meet emergency demand for electricity. Gerry Cauley, the president of the North American Electric Reliability Corp., which is certified by the federal government to assess and enforce reliability standards in the country’s power system, requested that the Texas grid operator respond by April 30 with a plan for how the state plans to address the shortfall of generating capacity.

So far, ERCOT and the Public Utility Commission have been unable to find a solution. The utility commission this summer doubled price limits in the wholesale market, and plans to do so again this year, but that hasn’t offered enough financial incentives for generators to build new plants.